Chinese edtech Youdao's Q1 revenue rises, led by online marketing gains

Youdao

21/05/2026 09:40

Corrects revenue in Key Details table to RMB 1.35 bln from RMB 1.34 bln

Overview

China AI learning and ad firm's Q1 revenue rose 3.8% yr/yr, led by online marketing gains

Q1 gross margin narrowed to 44.7% from 47.3% on weaker smart device profitability

Company repurchased 7.5 mln ADSs under share buyback program as of March 31, 2026

Outlook

Youdao aims for sustainable progress in profitability and cash flow throughout 2026

Result Drivers

SMART DEVICE DECLINE - Co said smart device revenue fell 42.6% yr/yr due to lower demand and increased bill of materials cost reduced gross margin

ONLINE MARKETING GAINS - Co said online marketing services revenue rose 20.9% yr/yr, driven by increased demand for performance-based ads through third-party internet properties and continued investments in AI technology

HIGHER OPERATING EXPENSES - Co said sales and marketing expenses rose 6.9% yr/yr due to increased sales efforts, payroll, and outsourcing fees tied to learning services

Company press release: ID:nPn4mZ4Dma

Key Details

Metric
Beat/Miss
Actual
Consensus Estimate
Q1 Revenue
RMB 1.35 bln
Q1 Gross Margin
44.70%
Q1 Gross Profit
RMB 602.30 mln


Analyst Coverage

The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 6 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

The average consensus recommendation for the advertising & marketing peer group is "buy"

Wall Street's median 12-month price target for Youdao Inc is $12.60, about 1.6% above its May 20 closing price of $12.40

The stock recently traded at 38 times the next 12-month earnings vs. a P/E of 32 three months ago

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

 (This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)